Question

Credit sales are collected as follows:65 percent in the month of the sale.25 percent in the month after the sale.10 percent in the second month after the sale. The accounts receivable balance at the end of the previous quarter was $94,000 ($64,000 of which were uncollected December sales). a.Calculate the sale

Answer 1

Answer:

Step-by-step explanation:

a) November sales = (Total Uncollected Sales - Uncollected Sales from December) / Collection rate after two months

= ($121,100 - $87,300) / 0.20

November sales = $169, 000.00

b) December sales = Uncollected sales from December / Collection rate of the previous month sales,

Therefore: December sales = $87,300 / 0.45 = $194,000

December sales = $194,000.00

c) Each month's collection for the company are:

Collections for ech month = 0.20(Sales from 2 months ago) + 0.25(Last month's sales) + 0.55 (Current sales)

January collections = 0.20($169000.00) + 0.25($194,000.00) + 0.55($132,000)

January collections = $154,900.00

February collections = 0.20($194,000.00) + 0.25($132,000) + 0.55($149,000)

February collections = $153,750.00

March collections = 0.20($132,000) + 0.25($149,000) + 0.55($164,000)

March collections = $153,850.00